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Tata is refusing to write off a £900m loan to its UK arm, dampening the likelihood of any rescue emerging.

It is understood that the Indian steel giant has attached a raft of conditions to a sale of Port Talbot and its other steel assets including an insistence that a massive intra-company debt would be repaid by a new owner.

Sources close to the process warned that Tata’s tough tactics had already prompted several bidders to walk away.

Tata announced it was pulling out of the UK in March. Its operations account for a sizeable chunk of the UK’s steel industry, employing 11,000 people, and supporting another 25,000 in the supply chain, according to the Institute for Public Policy Research, a...